450423 11073 Shenton Asia Bond Fund BN3Financial Year 2020 by 0.2% to 7.0%. Meanwhile, both Bank Negara Malaysia and the Bangko Sentral ng Pilipinas (BSP) lowered their benchmark interest

Nikko AM ShentonAsia Bond Fund

ANNUAL REPORTFor the fi nancial year ended 30 June 2019

1

MANAGERSNikko Asset Management Asia Limited

12 Marina View, #18-02 Asia Square Tower 2, Singapore 018961

Company Registration No. 198202562H

DIRECTORSHou Wey Fook

Lim Soon ChongKiyotaka Ryu

Seet Oon Hui EleanorYu-Ming Wang

TRUSTEE & REGISTRARBNP Paribas Trust Services Singapore Limited

20 Collyer Quay, #01-01 Singapore 049319

AUDITORSPricewaterhouseCoopers LLP7 Straits View, Marina One,

East Tower, Level 12,Singapore 018936

CUSTODIANBNP Paribas Securities Services, operating through its Singapore Branch

20 Collyer Quay, #01-01 Singapore 049319

This report is also available on our website (www.nikkoam.com.sg)

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PERFORMANCE SUMMARY

Returns (%) 3 Mth 6 Mth 1 Yr 3 Yr 5 Yr 10 YrSince

Inception

Nikko AM Shenton Asia Bond Fund SGD Class A1 1.61 3.65 5.61 1.56 2.65 3.08 1.74

Nikko AM Shenton Asia Bond Fund SGD Class B1 1.64 3.83 5.94 1.95 3.02 3.43 2.05

Benchmark2 2.00 4.52 7.59 3.52 4.34 N/A N/A

Source: Nikko Asset Management Asia Limited & Markit Indices Limited. Returns as at 30 June 2019. Returns are calculated on a NAV-NAV basis, SGD, and based on the assumption that all dividends and distributions are reinvested, if any. Returns for period in excess of 1 year are annualised. Past performance is not indicative of future performance.


Inception

Nikko AM Shenton Asia Bond Fund SGD Class A1 -3.47 -1.53 0.33 -0.16 1.61 2.55 1.36

Nikko AM Shenton Asia Bond Fund SGD Class B1 -3.44 -1.36 0.65 0.23 1.97 2.90 1.68

Benchmark2 2.00 4.52 7.59 3.52 4.34 N/A N/A

Source: Nikko Asset Management Asia Limited & Markit Indices Limited. Returns as at 30 June 2019. Returns are calculated on a NAV-NAV basis, SGD, and based on the assumption that all dividends and distributions are reinvested, if any, and take into account of maximum initial sales charge and a realisation charge, currently nil, as and where applicable. Returns for period in excess of 1 year are annualised. Past performance is not indicative of future performance.


Inception

Nikko AM Shenton Asia Bond Fund USD Class A1 1.67 4.45 6.46 1.44 1.00 3.81 3.26

Nikko AM Shenton Asia Bond Fund USD Class B1 1.90 4.71 6.81 1.84 1.38 4.16 3.59

Benchmark2 2.11 5.30 8.43 3.34 2.65 N/A N/A

Source: Nikko Asset Management Asia Limited & Markit Indices Limited. Returns as at 30 June 2019. Returns are calculated on a NAV-NAV basis, USD, and based on the assumption that all dividends and distributions are reinvested, if any. Returns for period in excess of 1 year are annualised. Past performance is not indicative of future performance.


Inception

Nikko AM Shenton Asia Bond Fund USD Class A1 -3.41 -0.77 1.14 -0.28 -0.03 3.27 2.88

Nikko AM Shenton Asia Bond Fund USD Class B1 -3.19 -0.52 1.47 0.11 0.35 3.63 3.21

Benchmark2 2.11 5.30 8.43 3.34 2.65 N/A N/A

Source: Nikko Asset Management Asia Limited & Markit Indices Limited. Returns as at 30 June 2019. Returns are calculated on a NAV-NAV basis, USD, and based on the assumption that all dividends and distributions are reinvested, if any, and take into account of maximum initial sales charge and a realisation charge, currently nil, as and where applicable. Returns for period in excess of 1 year are annualised. Past performance is not indicative of future performance.

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Inception date: 1 August 2005

Note: (1) With effect from 17 October 2011, the Trust (formerly known as “DBSAM Investment Funds”) has

been renamed Nikko AM Asia Investment Funds and the Fund (formerly known as “DBS Asia Bond Fund”) has been renamed Nikko AM Shenton Asia Bond Fund.

(2) With effect from 1 October 2011, the HSBC Asian Local Bond Index (ALBI) Index has been designated as the benchmark against which the Fund’s performance will be measured. Prior to that, there was no benchmark for the Fund as it was managed on a total return basis.

With effect from 20 April 2016, the calculation and publication of the HSBC Asian Local Bond Index (ALBI) has ceased and the benchmark is replaced with the Markit iBoxx Asian Local Bond Index (ALBI).

The Markit iBoxx Asian Local Bond (ALBI) Index referenced herein is the property of Markit Indices Limited and is used under license. The Nikko AM Shenton Asia Bond Fund is not sponsored, endorsed, or promoted by Markit Indices Limited.

Portfolio Review

The Fund gained in the year ended June 2019The Nikko AM Shenton Asia Bond Fund (the “Fund”) posted a return of 5.61% (in SGD terms, on a NAV-NAV basis) for the 12 months ended 30 June 2019. Our exposure to Philippines, Indonesia and Thailand were the primary driver of gains, although our holdings in most of the other countries also contributed positively to returns over the period.

Market Review

Yields of US Treasuries (USTs) plummeted over the year in reviewThe start of the period saw UST yields rising, on the back of the positive trajectory of the US economy and hawkish comments from US Federal Reserve (Fed) Chairman Jerome Powell. The rise in yields proved to be short-lived, as the continuation of the US-China trade war, weak economic numbers from China, coupled with a precipitous decline in global oil prices dissuaded investors from adding on risk. Moreover, a slew of disappointing earnings results from US companies caused a signifi cant correction in US equities thereafter, causing UST yields to slide. In December 2018, risk assets came under continued pressure from a multitude of factors including growth concerns in major economies, an increased likelihood of a no deal Brexit, US government shutdown and a sharp decline in risk assets and energy prices. Despite these developments, the Fed raised rates anew, sending equity indices to the year’s lows. As markets began to price out any rate hikes in 2019, yields moved lower. UST yields traded largely sideways in the fi rst quarter of 2019. However, as major central banks turned decidedly dovish and trade negotiations between US and China deteriorated, yields started falling steeply. Overall, 2-year and 10-year UST yields ended the period at 1.76% and 2.01% respectively, about 77 basis points (bps) and 86bps lower compared to end-June 2018. High-yielding bonds outperformed; currencies registered mixed performances against the USDAsian local government bonds registered gains over the period, following the lead of USTs. The improvement in risk sentiment benefi tted high yielders like Philippines, Indonesia and India. Increased expectation of monetary easing by their central banks in the latter half of the 12-month period, further supported demand for the bonds. Indonesian and Philippine bonds also benefi tted from Standard & Poor’s credit rating upgrade on both countries. Meanwhile, regional currencies registered mixed performances against the USD over the year. The Thai baht, Philippine peso and Indonesian rupiah appreciated against the greenback, while the Chinese renminbi, South Korean won and Malaysian ringgit ended lower vis-à-vis the USD. Notably, the outperformance of the Thai baht was supported by strong portfolio infl ows into baht-denominated assets over the period.

4

Economic growth mostly moderated in the fi rst quarter of 2019GDP growth in Indonesia, Malaysia, Thailand, Singapore and the Philippines all moderated in the fi rst quarter of 2019. Economic activity in Indonesia eased to 5.1% Year-on-Year (YoY), on the back of a slowdown in gross fi xed capital formation growth, while private consumption spending growth rose further. Meanwhile, weaker exports dragged down growth in other regional countries. In Malaysia, weaker investment spending also contributed to the moderation in fi rst quarter growth. Easing export growth and slower public sector spending led the Philippines to register considerably slower growth in the fi rst three months of 2019. In Thailand, GDP growth moderated to a four-year low. A spike in political risk surrounding the general election weighed on the domestic economy, while net trade was a drag. Meanwhile, the Chinese economy grew at a steady 6.4% in the fi rst three months of 2019. Property investment was a major driver of growth, rising close to 12% in the period.

Infl ation picture mostly moderated across Asia There was a marked drop in infl ationary pressures in the Philippines over the period, due partly to softer food and transport infl ation, as well as favourable base effects. After registering a high of 6.7% YoY in October 2018, headline Consumer Price Index (CPI) saw a steady moderation, with the June 2019 print registering at 2.7%. Meanwhile, moderation in headline CPI in India and South Korea were prompted partly by subdued food prices. In Thailand, infl ationary pressures stayed low throughout the year, printing 0.87% YoY in June 2019, while the annual infl ation rate in Indonesia remained benign and within the central bank’s infl ation target for most of the period. In contrast, an unfavourable base effect was the main factor in the sudden rise in the headline CPI reading for Malaysia in June 2019.

Central banks lowered policy rates in 2019The Reserve Bank of India cut its key lending rate by a total of 75bps in the fi rst half of 2019, bringing the rate to a nine-year low, amid slowdown in economic activity. It also shifted its monetary policy stance from ‘neutral’ to ‘accommodative’ in June, simultaneously lowering its GDP growth forecast for Financial Year 2020 by 0.2% to 7.0%. Meanwhile, both Bank Negara Malaysia and the Bangko Sentral ng Pilipinas (BSP) lowered their benchmark interest rates in May. According to the Malaysian central bank, the 25bps cut was deemed necessary to “preserve the degree of monetary accommodativeness.” Meanwhile, the Philippine central bank cited lower infl ation and infl ation expectations as reasons for the move. In addition, BSP also declared that banks’ Reserve Requirement Ratios (RRR) will be lowered by a total of 200bps – to be implemented in stages. Separately, the Monetary Authority of Singapore (MAS) kept the monetary policy setting unchanged, after two consecutive slight increases in the pace of SGDNEER appreciation. Bank Indonesia (BI) trimmed banks’ RRR by 50bps, with BI Governor Perry Warjiyo signalling that a rate cut is coming.

Market Outlook & Strategy

Maintain preference for mid to high carry bondsWe believe that a fi nal resolution to the trade confl ict will unlikely materialise in the near-term, hence, we expect that world economic growth will continue to slow down, albeit in varying degrees across country and region. This would prompt major central banks including the US Fed and the European Central Bank (ECB) to maintain or strengthen their dovish lean, which would support demand for fi xed income assets in general.

Against such a backdrop, our preference for mid to high carry bonds of countries with room to further ease monetary policy in the near-term remains. We highlight that BI has started its monetary policy easing cycle, and BI Governor Perry Warjiyo has hinted that there is further room to unwind a series of hikes in 2019, given that the Fed is slated to ease, infl ation remains benign and the rupiah and current account balance are relatively stable. These factors, together with favourable technicals should provide good support for Indonesian bonds. Similarly, we view central banks in India and the Philippines to have room to further cut interest rates, as their infl ation rates become well-entrenched within their respective targets.

5

Cautious on Singapore dollar and Korean wonOn currencies, we hold cautious views on the Singapore dollar and Korean won. The latest sentiment indicators for Singapore’s manufacturing and electronics indicate further contraction. This has caused renewed pressure on the SGDNEER and has increased the risk that the MAS may ease its FX policy. Singapore’s externally-reliant economy might continue to suffer from trade pessimism. Moreover, close correlation to the euro and pound - which have been under pressure from a dovish ECB and uncertainties surrounding Brexit – would further dent sentiment towards the Singapore dollar. Similarly, won underperformance is likely to persist, on the back of worsening trade tension between Korea and Japan, and continued weakness in the global trade environment.

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IMPORTANT INFORMATION

This document is for information only with no consideration given to the specifi c investment objective, fi nancial situation and particular needs of any specifi c person. Any securities mentioned herein are for reporting or illustration purposes only and should not be construed as a recommendation for investment. You should seek advice from a fi nancial adviser before making any investment. In the event that you choose not to do so, you should consider whether the investment selected is suitable for you. Investments in unit trusts or ETFs are not deposits in, obligations of, or guaranteed or insured by Nikko Asset Management Asia Limited (“Nikko AM Asia”).

Past performance or any prediction, projection or forecast is not indicative of future performance. The funds may use or invest in fi nancial derivative instruments. The value of units and income from them may fall or rise. Investments in the funds are subject to investment risks, including the possible loss of principal amount invested. You should read the relevant prospectus and product highlights sheet obtainable from appointed distributors of Nikko AM Asia or our website (www.nikkoam.com.sg) before investing.

The information contained herein may not be copied, reproduced or redistributed without the express consent of Nikko AM Asia. While reasonable care has been taken to ensure the accuracy of the information as at the date of publication, Nikko AM Asia does not give any warranty or representation, either express or implied, and expressly disclaims liability for any errors or omissions. Information may be subject to change without notice. Nikko AM Asia accepts no liability for any loss, indirect or consequential damages, arising from any use of or reliance on this document. This publication has not been reviewed by the Monetary Authority of Singapore

For Hong Kong Investors

The fund is only offered to professional investors and is not authorized by the Securities and Futures Commission in Hong Kong. The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to this document. If you are in any doubt about any of the contents, you should obtain independent professional advice.

Nikko Asset Management Asia Limited. Registration Number 198202562H

7

SOFT DOLLAR COMMISSIONS/ARRANGEMENTS

In their management of the Nikko AM Shenton Asia Bond Fund, the Managers currently do not receive or enter into any soft dollar commissions or arrangements.

8

NIKKO AM SHENTON ASIA BOND FUND (Constituted under a Trust Deed registered in the Republic of Singapore)

REPORT OF THE TRUSTEE For the financial year ended 30 June 2019

The Trustee is under a duty to take into custody and hold the assets of Nikko AM Shenton Asia Bond Fund (the “Fund”) in trust for the unitholders. In accordance with the Securities and Futures Act (Cap. 289), its subsidiary legislation and the Code on Collective Investment Schemes, the Trustee shall monitor the activities of the Manager for compliance with the limitations imposed on the investment and borrowing powers as set out in the Trust Deed in each annual accounting year and report thereon to unitholders in an annual report.

To the best knowledge of the Trustee, the Manager has, in all material respects, managed the Fund during the financial year covered by these financial statements,set out on pages 1 to 4 , in accordance with the limitations imposed on the investment and borrowing powers set out in the Trust Deed.

For and on behalf of the Trustee BNP Paribas Trust Services Singapore Limited

Authorised signatory 27 September 2019

9


STATEMENT BY THE MANAGER For the financial year ended 30 June 2019

In the opinion of Nikko Asset Management Asia Limited, the accompanying financial statements set out on pages 1 to 4 , comprising the Statement of Total Return, Statement of Financial Position, Statement of Movements of Unitholders’ Funds, Statement of Portfolio and Notes to the Financial Statements are drawn up so as to present fairly, in all material respects, the financial position and the portfolio holdings of Nikko AM Shenton Asia Bond Fund (the “Fund”) as at 30 June 2019, and the financial performance and movements in unitholders’ funds for the financial year then ended in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Singapore Chartered Accountants. At the date of this statement, there are reasonable grounds to believe that the Fund will be able to meet its financial obligations as and when they materialise.

For and on behalf of the ManagerNikko Asset Management Asia Limited

Authorised signatory 27 September 2019

10

INDEPENDENT AUDITOR’S REPORT TO THE UNITHOLDERS OF NIKKO AM SHENTON ASIA BOND FUND (Constituted under a Trust Deed registered in the Republic of Singapore)

Our Opinion

In our opinion, the accompanying financial statements of Nikko AM Shenton Asia Bond Fund (the “Fund”), are properly drawn up in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Singapore Chartered Accountants, so as to present fairly, in all material respects, the financial position and portfolio holdings of the Fund as at 30 June 2019, and of the financial performance and movements of unitholders’ funds for the financial year ended on that date.

What we have audited

The financial statements of the Fund comprise: the Statement of Total Return for the financial year ended 30 June 2019;the Statement of Financial Position as at 30 June 2019;the Statement of Movements of Unitholders’ Funds for the financial year ended 30 June2019;the Statement of Portfolio as at 30 June 2019; andthe notes to the financial statements, including a summary of significant accountingpolicies.

Basis for Opinion

We conducted our audit in accordance with Singapore Standards on Auditing (“SSAs”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

We are independent of the Fund in accordance with the Accounting and Corporate Regulatory Authority Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities (“ACRA Code”) together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA Code.

Other Information

The Fund’s Manager (the “Manager”) is responsible for the other information. The other information comprises all sections of the annual report but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

11


Responsibilities of the Manager for the Financial Statements

The Manager is responsible for the preparation and fair presentation of these financial statements in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Singapore Chartered Accountants and for such internal control as the Manager determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Manager is responsible for assessing the Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Manager either intends to terminate the Fund or to cease the Fund’s operations, or has no realistic alternative but to do so.

The Manager’s responsibilities include overseeing the Fund’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements,whether due to fraud or error, design and perform audit procedures responsive to thoserisks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error, as fraud may involve collusion, forgery,intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the Fund’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the Manager.

Conclude on the appropriateness of the Manager’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Fund’s abilityto continue as a going concern. If we conclude that a material uncertainty exists, we arerequired to draw attention in our auditor’s report to the related disclosures in the financialstatements or, if such disclosures are inadequate, to modify our opinion. Our conclusionsare based on the audit evidence obtained up to the date of our auditor’s report. However,future events or conditions may cause the Fund to cease to continue as a going concern.

12


Evaluate the overall presentation, structure and content of the financial statements,including the disclosures, and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.

We communicate with the Manager regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

PricewaterhouseCoopers LLP Public Accountants and Chartered Accountants Singapore, 27 September 2019

13


The accompanying notes form an integral part of these financial statements.

STATEMENT OF TOTAL RETURN For the financial year ended 30 June 2019

Note 2019 2018 S$ S$

IncomeDividends 96,234 94,183 Interest on cash and bank balances 18,562 14,661

114,796 108,844

Less: Expenses Management fee 388,827 487,211 Management fee rebate (21,656) (21,318) Registrar fee 21,678 20,270 Trustee fee 18,958 23,838 Custody fee 27,184 32,957 Audit fee 12,436 13,361 Valuation fee 21,328 26,817 Transaction costs 15,310 22,121 Other expenses 33,927 52,971

517,992 658,228

Net losses (403,196) (549,384)

Net gains or losses on value of investments and financial derivatives Net gains on investments 3,651,047 33,258 Net foreign exchange losses (118,762) (65,806) Net (losses)/gains on financial derivatives (106,817) 31,608

3,425,468 (940)

Total return/(deficit) for the financial year before income tax 3,022,272 (550,324)

Less: Income tax 3 (267,667) (186,437) Total return/(deficit) for the financial year

after income tax 2,754,605 (736,761)

14



STATEMENT OF FINANCIAL POSITION As at 30 June 2019

Note 2019 2018 S$ S$

ASSETSPortfolio of investments 45,445,367 53,120,237 Sales awaiting settlement 3,667,824 -Receivables 4 1,574,936 13,215Cash and bank balances 6,033,030 4,597,565 Margin accounts 5 - 59,493Financial derivatives at fair value 7 66,324 276,247Total assets 56,787,481 58,066,757

LIABILITIESPayables 6 285,407 494,338 Purchases awaiting settlement 4,583,567 -Distribution payable 904,321 1,018,804 Financial derivatives at fair value 7 96,478 224,922 Total liabilities 5,869,773 1,738,064

EQUITY Net assets attributable to unitholders 8 50,917,708 56,328,693

15



STATEMENT OF MOVEMENTS OF UNITHOLDERS' FUNDS For the financial year ended 30 June 2019

2019 2018 S$ S$

Net assets attributable to unitholders at the beginning of the financial year 56,328,693 60,237,704

Operations Change in net assets attributable to unitholders

resulting from operations 2,754,605 (736,761)

Unitholders' contributions/(withdrawals)

Creation of units 4,694,404 1,855,676 Cancellation of units (11,111,047) (2,973,856)

Change in net assets attributable to unitholders resulting from net creation and cancellation of

units (6,416,643) (1,118,180)

Distributions 9 (1,748,947) (2,054,070)

Total decreases in net assets attributable to unitholders (5,410,985) (3,909,011)

Net assets attributable to unitholders at the end of the financial year 8 50,917,708 56,328,693

16


STATEMENT OF PORTFOLIO As at 30 June 2019

By Geography (Primary)

Holdings at 30 June 2019

Fair value at 30 June 2019

Percentage of total net assets attributable to unitholders at 30 June 2019

S$ %Quoted Fixed Income Securities

The accompanying notes form an integral part of these financial statements

BRITAINStandard Chartered Public Listed Company 5.375%

due 31/12/2059 2,000,000 2,007,600 3.94Total BRITAIN 2,007,600 3.94

CAYMAN ISLANDSFantasia Holdings Group Company Limited 11.875%

due 11/09/2020 3,800,000 752,712 1.48Total Cayman Islands 752,712 1.48

CHINABank of China Limited 3.3% due 17/04/2022 2,330,000 460,270 0.90China Government Bond 3.29% due 23/05/2029 5,000,000 989,621 1.94China Government Bond 3.8% due 09/07/2023 2,500,000 508,387 1.00China Government Bond 4.1% due 21/05/2045 5,000,000 1,022,961 2.01Total CHINA 2,981,239 5.85

HONG KONG SARHong Kong Government Bond Programme 2.02% due

07/03/2034 5,000,000 901,617 1.77Hong Kong Government Bond 1.51% due 24/02/2027 2,000,000 349,197 0.69Total Hong Kong SAR 1,250,814 2.46

INDIAIndia Government Bond 7.26% due 14/01/2029 80,000,000 1,620,246 3.18India Government Bond 7.59% due 11/01/2026 50,000,000 1,011,032 1.99India Government Bond 7.95% due 28/08/2032 30,000,000 633,109 1.24National Highways Authority of India 7.3% due

18/05/2022 20,000,000 387,596 0.76Total INDIA 3,651,983 7.17

INDONESIAIndonesia Treasury Bond 6.625% due 15/05/2033 22,000,000,000 1,921,303 3.77Indonesia Treasury Bond 7% due 15/05/2027 4,000,000,000 377,992 0.74Indonesia Treasury Bond 7.5% due 15/05/2038 3,000,000,000 279,000 0.55Indonesia Treasury Bond 8.25% due 15/05/2029 12,512,000,000 1,272,795 2.50Indonesia Treasury Bond 8.375% due 15/04/2039 10,000,000,000 1,001,056 1.97Total INDONESIA 4,852,146 9.53

MALAYSIAMalaysia Government Bond 4.642% due 07/11/2033 3,000,000 1,061,248 2.08Malaysia Government Investment Issue 4.13% due

09/07/2029 6,000,000 2,042,940 4.01Malaysia Government Investment Issue 4.258% due

26/07/2027 3,000,000 1,021,961 2.01Malaysia Government Investment Issue 4.895% due

08/05/2047 2,000,000 709,463 1.40Total MALAYSIA 4,835,612 9.50

17



By Geography (Primary) (continued)

Holdings at 30 June 2019


Percentage of total net assets attributable to unitholders at 30 June 2019

S$ %Quoted Fixed Income Securities (continued)

The accompanying notes form an integral part of these financial statements

PHILIPPINESPhilippine Government Bond 4.625% due 09/09/2040 20,000,000 488,924 0.96Philippine Government Bond 5.5% due 08/03/2023 14,110,000 380,009 0.75Philippine Government Bond 5.75% due 12/04/2025 72,200,000 1,972,330 3.87Philippine Government Bond 6.25% due 22/03/2028 20,000,000 572,807 1.12Philippine Government Bond 6.25% due 12/03/2024 40,000,000 1,114,106 2.19Philippine Government Bond 6.875% due 10/01/2029 30,000,000 901,216 1.77Philippine Government Bond 8% due 19/07/2031 23,000,000 766,691 1.51Total PHILIPPINES 6,196,083 12.17

SINGAPOREOversea-Chinese Banking Corporation Limited 4% due

31/12/2049 500,000 515,135 1.01Singapore Airlines Limited 3.035% due 11/04/2025 1,000,000 1,002,506 1.97Singapore Government Bond 2.75% due 01/04/2042 400,000 418,200 0.82Singapore Government Bond 2.75% due 01/03/2046 300,000 310,500 0.61Singapore Government Bond 3.375% due 01/09/2033 700,000 793,450 1.56United Overseas Bank Limited 4.75% due 31/12/2049 1,000,000 1,007,614 1.98Total SINGAPORE 4,047,405 7.95

SOUTH KOREAKorea Treasury Bond 1.875% due 10/06/2026 2,000,000,000 2,393,346 4.70Korea Treasury Bond 3.75% due 10/12/2033 1,500,000,000 2,237,832 4.40Korea Treasury Bond 4% due 10/12/2031 1,500,000,000 2,226,467 4.37Total SOUTH KOREA 6,857,645 13.47

THAILANDThailand Government Bond 1.25% due 12/03/2028 31,423,800 1,327,233 2.61Thailand Government Bond 2.125% due 17/12/2026 43,000,000 1,915,322 3.76Thailand Government Bond 3.58% due 17/12/2027 5,000,000 246,750 0.48Thailand Government Bond 3.625% due 16/06/2023 25,000,000 1,179,575 2.32Thailand Government Bond 3.85% due 12/12/2025 10,000,000 491,753 0.96Total THAILAND 5,160,633 10.13

Accrued interest receivable on quoted fixed income securities 429,537 0.84

Total Quoted Fixed Income Securities 43,023,409 84.49

Quoted Investment Fund

SINGAPORENikko AM China Onshore Bond Fund 2,504,265 2,421,958 4.76Total SINGAPORE 2,421,958 4.76

Total Quoted Investment Fund 2,421,958 4.76

Portfolio of investments 45,445,367 89.25Other net assets 5,472,341 10.75Net assets attributable to unitholders 50,917,708 100.00

18




By Geography (Summary) Percentage oftotal net assets

attributable to unitholders at30 June 2019 %

Percentage of total net assets

attributable tounitholders at30 June 2018

% Quoted Fixed Income SecuritiesBritain 3.94 -British Virgin Islands - 3.68Cayman Islands 1.48 -China 5.85 13.56 Hong Kong SAR 2.46 7.85 India 7.17 4.00 Indonesia 9.53 6.75 Malaysia 9.50 12.03 Philippines 12.17 4.34 Singapore 7.95 10.15 South Korea 13.47 18.71 Thailand 10.13 8.21 Accrued interest receivables on quoted fixed income securities 0.84 0.74 Total Quoted Fixed Income Securities 84.49 90.02

Quoted Investment FundSingapore 4.76 4.28 Total Quoted Investment Fund 4.76 4.28

Portfolio of investments 89.25 94.30 Other net assets 10.75 5.70 Net assets attributable to unitholders 100.00 100.00

19




By Industry (Secondary)


Percentage oftotal net assets

attributable to unitholders at30 June 2019


attributable tounitholders at

30 June 2018 S$ % %

Airlines 1,002,506 1.97 -Banks 3,990,619 7.84 11.85Debt Fund 2,421,958 4.75 4.28Diversified Financial Service - - 4.23Real Estate 752,712 1.48 1.10Sovereign 36,848,035 72.37 70.90Transportation - - 1.20Accrued interest receivables on quoted fixed

income securities 429,537 0.84 0.74

Portfolio of investments 45,445,367 89.25 94.30Other net assets 5,472,341 10.75 5.70Net assets attributable to unitholders 50,917,708 100.00 100.00

20


NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2019

These notes form an integral part of and should be read in conjunction with the accompanying financial statements.

1. General

Nikko AM Shenton Asia Bond Fund (the “Fund”) is a Singapore domiciled fund,constituted as a sub-fund of the Nikko AM Asia Investment Funds, pursuant to theTrust Deed dated 8 March 2000 as amended by Supplemental Deeds andAmended and Restated Deeds (collectively referred to as the “Deeds”). TheDeeds are governed by the laws of the Republic of Singapore. The Trustee of theFund is BNP Paribas Trust Services Singapore Limited (the “Trustee”). TheManager of the Fund is Nikko Asset Management Asia Limited (the “Manager”).

Nikko AM Asia Investment Funds comprise four separate and distinct sub-funds,namely Nikko AM Shenton Asia Dividend Equity Fund, Nikko AM Shenton GlobalProperty Securities Fund, Nikko AM Shenton Asia Bond Fund and MyHomeIncome (formerly known as MyHome Fund-Home Balanced).

Only the financial statements of Nikko AM Shenton Asia Bond Fund are presentedin this report.

There are currently five classes of unit established within the Fund, namely theSingapore Dollar (“SGD”) Class A units (denominated in SGD), the SingaporeDollar (“SGD”) Class B units (denominated in SGD), the United States Dollar(“USD”) Class A Units (denominated in USD), the United States Dollars (“USD”)Class B Units (denominated in USD) and the Renminbi (“RMB”) Class units(denominated in RMB).

The classes differ in terms of their class currency, the minimum subscriptionamounts applicable, the minimum holding and minimum realisation amountsapplicable, as well as the current annual management fee.

As of 30 June 2019, only units in SGD Class A, SGD Class B, USD Class A andUSD Class B have been issued.

2. Significant accounting policies

The principal accounting policies applied in the preparation of these financialstatements are set out below:

(a) Basis of preparation

The financial statements have been prepared under the historical cost convention,as modified by the revaluation of financial assets at fair value through profit or lossand in accordance with the recommendations of Statement of RecommendedAccounting Practice 7 “Reporting Framework for Unit Trusts” (“RAP 7”) issued bythe Institute of Singapore Chartered Accountants.

21



2. Significant accounting policies (continued)

(b) Recognition of income

Dividend income from investments is recognised when the right to receivepayment is established.

Interest income is recognised on a time-proportion basis using the effectiveinterest rate method.

(c) Distributions

The Manager has the absolute discretion to determine whether a distribution is tobe made. In such an event, an appropriate amount will be transferred to adistribution account to be paid on the distribution date. The amount shall not betreated as part of the property of the Fund. Distributions are accrued for at thereporting date if the necessary approvals have been obtained and a legalconstructive obligation has been created.

(d) Investments

Investments are classified as financial assets at fair value through profit or loss.

(i) Initial recognition

Purchases of investments are recognised on the trade date. Investments arerecorded at fair value on initial recognition.

(ii) Subsequent measurement

Investments are subsequently carried at fair value. Net changes in fair valueon investments are included in the Statement of Total Return in the year inwhich they arise.

(iii) Derecognition

Investments are derecognised on the trade date of disposal. The resultantrealised gains and losses on the sales of investments are computed on thebasis of the difference between the weighted average cost and selling pricegross of transaction costs, and are taken up in the Statement of Total Return.

(e) Basis of valuation of investments

The fair value of financial assets and liabilities traded in active markets is basedon quoted market prices at the close of trading on the reporting date. The quotedmarket price used for fixed income securities held by the Fund is the mid-marketprice for both financial assets and financial liabilities. The fair value of investmentsheld in underlying funds is the quoted net asset value of the underlying fund, asdetermined by the underlying fund’s administrator.

22




(f) Receivables

Receivables are non-derivative financial assets with fixed or determinablepayments that are not quoted in an active market. Receivables are initiallyrecognised at their fair value and subsequently carried at amortised cost using theeffective interest method, less accumulated impairment losses.

(g) Sales and purchases awaiting settlement

Sales and purchases awaiting settlement represent receivables for securities soldand payables for securities purchased that have been contracted for but not yetsettled or delivered on the statement of financial position date respectively. Theseamounts are recognised initially at fair value and subsequently measured atamortised cost.

(h) Cash and cash equivalents

Cash and cash equivalents comprise cash at banks and on hand which aresubject to an insignificant risk of changes in value.

(i) Payables

Accrued expenses are recognised initially at fair value and subsequently stated atamortised cost using the effective interest method.

(j) Foreign currency translation

(i) Functional and presentation currency

The Fund qualifies as an authorised scheme under the securities and FuturesAct ("SFA") of Singapore and is offered to retail investors in Singapore. TheFund’s activities are substantially based in Singapore, with subscriptions andredemptions of the units of the Fund denominated in Singapore Dollar ("SGD")and United States Dollar ("USD").

The performance of the Fund is measured and reported to the investors inSingapore Dollar. The Manager considers the Singapore Dollar as thecurrency which most faithfully represents the economic effects of theunderlying transactions, events and conditions. The financial statements areexpressed in Singapore Dollar, which is the Fund’s functional and presentationcurrency.

23




(j) Foreign currency translation (continued)

(ii) Transactions and balances

Foreign currency monetary assets and liabilities are translated into SingaporeDollar at the rates of exchange prevailing at the date of the Statement ofFinancial Position. The net unrealised gain or loss is taken to the Statement ofTotal Return. Transactions during the year are recorded in Singapore Dollar atthe rates of exchange ruling on transaction dates. All realised gains or lossesare recognised in the Statement of Total Return.

(k) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in theStatement of Financial Position when there is a legally enforceable right to offsetthe recognised amounts and there is an intention to settle on a net basis orrealise the asset and settle the liability simultaneously. The legally enforceableright must not be contingent on future events and must be enforceable in thenormal course of business and in the event of default, insolvency or bankruptcyof the company or the counterparty.

(l) Collateral

Cash collateral provided by the Fund is identified in the Statement of FinancialPosition as margin cash and is not included as a component of cash and cashequivalents. For collateral other than cash, if the party to whom the collateral isprovided has the right by contract or custom to sell or re-pledge the collateral, theFund classifies that asset in its Statement of Financial Position separately fromother assets and identifies the asset as pledged collateral. Where the party towhom the collateral is provided does not have the right to sell or re-pledge, adisclosure of the collateral provided is made in the Notes to the FinancialStatements.

(m) Structured entities

A structured entity is an entity that has been designed so that voting or similarrights are not the dominant factor in deciding who controls the entity, such aswhen any voting rights relate to administrative tasks only and the relevantactivities are directed by means of contractual arrangements. A structured entityoften has some or all of the following features or attributes: (a) restrictedactivities, (b) a narrow and well-defined objective, such as to provide investmentopportunities for investors by passing on risks and rewards associated with theassets of the structured entity to investors, (c) insufficient equity to permit thestructured entity to finance its activities without subordinated financial supportand (d) financing in the form of multiple contractually linked instruments toinvestors that create concentrations of credit or other risks (tranches).

24




(m) Structured Entities (continued)

The Fund considers all of their investment in other fund ("lnvestee Fund") to beinvestment in unconsolidated structured entity. The Fund invests in lnvesteeFund whose objective range from achieving short to long term capital growth andwhose investment strategy does not include the use of leverage. The InvesteeFund is managed by the Manager and applies various investment strategies toaccomplish their respective investment objective. The lnvestee Fund financestheir operations by issuing redeemable units which are puttable at theunitholder's option and entitles the unitholder to a proportional stake in therespective fund's net assets. The Fund holds redeemable units in the lnvesteeFund.

The change in fair value of the lnvestee Fund is included in the Statement ofTotal Return in "Net gains/(losses) on investments".

(n) Financial derivatives

Financial derivatives are entered into for the purposes of efficient portfoliomanagement, tactical asset allocation or specific hedging of financial assets heldas determined by the Manager and in accordance with the provisions of theDeeds.

Financial derivatives outstanding at the end of the financial year are valued atforward rates or at current market prices using the “mark-to-market” method, asapplicable, and the resultant gains and losses are taken up in the Statement ofTotal Return.

(o) Expenses charged to the Fund

Management fees are charged directly to each class as follows:

Class A: 1% per annumClass B: 0.8% per annum

All other expenses relate to the Fund as a whole and are further allocated to eachshare class based on the respective asset under management proportion.

25



3. Income Tax

The Fund has been approved by the Monetary Authority of Singapore (“MAS”)under the Enhanced Tier Fund Scheme (section 13X of the Income Tax Act andthe relevant Regulations). Subject to certain conditions being met on an annualbasis, the Fund may enjoy Singapore corporate income tax exemption on"specified income" derived from "designated investments" for the life of the Fund.The tax exemption does not apply in the year when the relevant conditions are notmet. Losses from "designated investments" are correspondingly disregarded. Theterms “specified income” and “designated investments” are defined in the relevantincome tax regulations. The Manager and the Trustee of the Fund will ensure thatthe Fund fulfills its reporting obligations under the ETF Scheme.

Income tax for the financial year ended on 30 June 2019 and 2018 comprises:

2019 S$

2018 S$

Singapore income tax - Current year - 21,287- Over provision of prior year (23,762) -

Capital gains tax 211,182 65,527Overseas income tax 80,247 99,623

267,667 186,437

The Singapore income tax represents tax charge on distributions from Singapore unit trusts. Capital gains tax comprise of capital gain tax on realised gains and provisions for capital gains on tax outside of Singapore. The overseas income tax represents tax deducted for interest earned derived from outside Singapore.

4. Receivables

2019 S$

2018 S$

Receivable from unitholders for creation of units 1,574,936 3,967Accrued interest receivable - 8,554Other receivables - 694

1,574,936 13,215

26



5. Margin Account

2019 S$

2018 S$

Margin account - 59,493

Margin account represents margin deposits held in respect of open exchange-traded futures contracts.

6. Payables

2019 S$

2018 S$

Payable to unitholders for cancellation of units 7,655 285,453Amount due to the Manager 101,938 124,978Amount due to Trustee 5,118 6,246Registrar fees payable 4,802 4,802Provision for audit fee 12,498 13,482Tax payable 142,031 42,576Other payables 11,365 16,801

285,407 494,338

Amount due to the Manager comprises of management fee payable to Nikko Asset Management Asia Limited. Trustee fee and registrar fee are payable to BNP Paribas Trust Services Singapore Limited. Valuation fee and custody fee are payable to BNP Paribas Securities Services operating through its Singapore Branch. Valuation fee and custody fee are classified under other payables.

27



7. Financial derivatives at fair value

Financial derivatives comprise forward foreign exchange contracts for purchasesand sales of foreign currencies. The year-end positive and negative fair valuesrepresent the unrealised gains and losses on revaluation of foreign exchangecontracts at the Statement of Financial Position date. The contract or underlyingprincipal amounts of these financial derivatives and their corresponding grosspositive or negative fair values at Statement of Financial Position date areanalysed below.

Contract or underlying principal amount

Year-end positive fair value

Year-end negative fair value

2019 S$

2018 S$

2019 S$

2018 S$

2019 S$

2018 S$

Forward foreign exchange contracts 24,042,376 36,267,706 66,324 276,247 96,478 224,922

The Fund also restricts its exposure to credit losses on the trading derivative instruments it holds by entering into master netting arrangements with counterparties (approved brokers) with whom it undertakes a significant volume of transactions. Master netting arrangements do not result in an offset of Statement of Financial Position assets and liabilities, as transactions are usually settled on a gross basis. However, the credit risk associated with favourable contracts is reduced by a master netting arrangement to the extent that if an event of default occurs, all amounts with the counterparty are terminated and settled on a net basis. The Fund’s overall exposure to credit risk on derivative instruments subject to a master netting arrangement can change substantially within a short period. As it is affected by each transaction subject to the arrangement.

28

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29

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30



8. Units in issue

During the year ended 30 June 2019 and 2018, the numbers of units issued,redeemed and outstanding were as follows:

SGD Class A 2019 2018

Units at beginning of the financial year 5,688,396 6,161,554Units created 5,732,895 466,780Units cancelled (1,598,526) (939,938)Units at end of the financial year 9,822,765 5,688,396

Net assets attributable to unitholders - S$ 7,926,920 4,511,775Net asset value per unit - S$ 0.807 0.793

USD Class A 2019 2018.

Units at beginning of the financial year 358,612 346,215Units created 12,450 12,427Units cancelled (67,323) (30)Units at end of the financial year 303,739 358,612

Net assets attributable to unitholders - S$ 245,446 284,533Net asset value per unit - S$ 0.808 0.793

SGD Class B 2019 2018

Units at beginning of the financial year 61,840,352 62,714,964Units created 36,460 1,686,719Units cancelled (11,734,904) (2,561,331)Units at end of the financial year 50,141,908 61,840,352

Net assets attributable to unitholders - S$ 42,724,254 51,512,508Net asset value per unit - S$ 0.852 0.833

USD Class B 2019 2018

Units at beginning of the financial year 23,854 23,067Units created 865 792Units cancelled - (5)Units at end of the financial year 24,719 23,854

Net assets attributable to unitholders - S$ 21,088 19,877Net asset value per unit - S$ 0.853 0.833

Distributions are accrued at the reporting date if necessary approvals have been obtained and a legal or constructive obligation has been created for the purpose of determining the accounting net asset values in the financial statements.

31



8. Units in issue (continued)

A reconciliation of the net asset value as reported in the Statement of FinancialPosition to the net asset value as determined for the purpose of processing unitsubscription and redemption is provided below:

SGD Class A 2019S$

2018S$

Net assets attributable to unitholders per financial statements per unit 0.807 0.793

Effect of distribution per unit 0.015 0.015Effect for movement in the net asset value between the

last dealing date and the end of the reporting period ^ - -Net assets attributable to unitholders for

issuing/redeeming per unit 0.822 0.808

USD Class A 2019S$

2018S$

Net assets attributable to unitholders per financial statements 0.808 0.793

Effect of distribution per unit 0.015 0.015Effect for movement in the net asset value between the last dealing date and the end of the reporting period ^ - 0.001

Net assets attributable to unitholders for issuing/redeeming per unit 0.823 0.809

SGD Class B 2019S$

2018S$

Net assets attributable to unitholders per financial statements 0.852 0.833Effect of distribution per unit 0.015 0.015Effect for movement in the net asset value between the last dealing date and the end of the reporting period ^ - -


32



8. Units in issue (continued)

USD Class B 2019 S$

2018 S$

Net assets attributable to unitholders per financial statements 0.853 0.833Effect of distribution per unit 0.015 0.015Effect for movement in the net asset value between the last dealing date and the end of the reporting period ^ - 0.001


^The net asset value for the purposes of processing unit subscription and redemption was established in accordance with the methodology indicated in the Fund’s Prospectus. This item reflects the movement in net asset value between the last dealing date and the end of the reporting period. In 2019, the effect is less than 0.001.

9. Distributions

2019 S$

2018 S$

Final distribution of (SGD Class A & B) S$1.50 per 100 units and (USD Class A & B) US$1.09 per 100 units in respect of the financial year ended 30 June 2019 904,321 -

Interim distribution of (SGD Class A & B) S$1.50 per 100 units and (USD Class A & B) US$1.09 per 100 units in respect of the financial year ended 30 June 2019 844,626 -

Final distribution of (SGD Class A & B) S$1.50 per 100 units and (USD Class A & B) US$1.12 per 100 units in respect of the financial year ended 30 June 2018 - 1,018,804

Interim distribution of (SGD Class A & B) S$1.50 per 100 units and (USD Class A & B) US$1.11 per 100 units in respect of the financial year ended 30 June 2018 - 1,035,266

1,748,947 2,054,070

33



10. Financial risk management

The Fund’s activities expose it to a variety of risk, including but not limited tomarket risk (including currency risk, interest rate risk and price risk), liquidity riskand credit risk. The Manager is responsible for the implementation of the overallrisk management programme, which seeks to minimise potential adverse effectson the Fund’s financial performance. Specific guidelines on exposures toindividual securities and certain industries and/or countries are in place as part ofthe overall financial risk management to reduce the Fund’s exposures to theserisks.

The investment objective of the Fund is to provide investors with medium to longterm capital appreciation and to make regular income distributions during theinvestment period. The Fund will invest primarily in transferable debt securitiesissued by issuers based in the Asia Pacific region which may be in local and/orforeign currencies. The Manager, at their sole discretion, may invest not morethan 30% of the Fund in regions other than the Asia Pacific region.

These financial instruments are held in accordance with the published investmentpolicies of the Fund and managed accordingly to achieve the investmentobjectives.

(a) Market risk - Price risk

Price risk is the risk that arises from uncertainties about future prices of financialinstruments.

The Fund’s investment is substantially dependent on the changes of marketprices. The Fund’s overall market positions are monitored regularly so as toassess any changes in fundamentals and valuation. However, events beyondreasonable control of the Manager could affect the prices of the underlyinginvestments and hence the net asset value of the Fund.

The Fund’s market price risk is managed through diversification of the investmentportfolio across various geographies and industries globally.

The market prices of financial assets held by the Fund are dependent onprevailing market interest rates, as the Fund invests in bonds issued bygovernments and corporations. No separate price risk sensitivity analysis isprepared as it is covered as part of interest rate risk sensitivity analysis.

(b) Market risk - Interest rate risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate dueto changes in market interest rates (fair value risk).

The Manager will regularly assess the economic condition, monitor changes ininterest rates, outlook and take appropriate measures accordingly to control theimpact of interest rate risk. The Fund's overall market positions are monitoredfrequently and are reviewed formally on a quarterly basis by the Manager.

34

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--

- 66

,324

66,3

24To

tal a

sset

s 9,

563,

379

-4,

782,

655

34,2

80,8

68

8,16

0,57

9 56

,787

,481

Liab

ilitie

sP

ayab

les

--

--

285,

407

285,

407

Pur

chas

es a

wai

ting

settl

emen

t -

- -

- 4,

583,

567

4,58

3,56

7 D

istri

butio

ns p

ayab

le

--

--

904,

321

904,

321

Fina

ncia

l der

ivat

ives

at f

air v

alue

-

--

- 96

,478

96,4

78To

tall

iabi

litie

s-

- -

- 5,

869,

773

5,86

9,77

3

35

NIK

KO

AM

SH

ENTO

N A

SIA

BO

ND

FU

ND

(C

onst

itute

d un

der a

Tru

st D

eed

regi

ster

ed in

the

Rep

ublic

of S

inga

pore

)

NO

TES

TO T

HE

FIN

AN

CIA

L ST

ATE

MEN

TS

For t

he fi

nanc

ial y

ear e

nded

30

June

201

9

10.

Fina

ncia

l ris

k m

anag

emen

t(co

ntin

ued)

(b)

Mar

ket r

isk

- Int

eres

t rat

e ris

k (c

ontin

ued)

As

at 3

0 Ju

ne 2

018

Floa

ting

rate

Fi

xed

rate

Non

-inte

rest

be

arin

gTo

tal

S$up

to 1

yea

r S$

1-5

year

s S$O

v er 5

yea

rs

S$S$

S$A

sset

s P

ortfo

lio o

f inv

estm

ents

1,

530,

812

676,

345

9,15

4,31

4 38

,930

,722

2,

828,

044

53,1

20,2

37

Rec

eiva

bles

- -

- -

13,2

15

13,2

15C

ash

and

bank

bal

ance

s4,

597,

565

- -

- -

4,59

7,56

5M

argi

n ac

coun

ts

- -

- -

59,4

93

59,4

93Fi

nanc

ial d

eriv

ativ

es a

t fai

r val

ue

--

--

276,

247

276,

247

Tota

l ass

ets

6,12

8,37

767

6,34

5 9,

154,

314

38,9

30,7

22

3,17

6,99

9 58

,066

,757

Liab

ilitie

sP

ayab

les

- -

- -

494,

338

494,

338

Dis

tribu

tions

pay

able

- -

- -

1,01

8,80

4 1,

018,

804

Fina

ncia

l der

ivat

ives

at f

air v

alue

-

--

- 22

4,92

2 22

4,92

2 To

tal l

iabi

litie

s -

- -

- 1,

738,

064

1,73

8,06

4

As

at 3

0 Ju

ne 2

019

and

2018

, an

incr

ease

/dec

reas

e of

inte

rest

rate

s by

1%

(201

8: 1

%),

with

all

othe

r var

iabl

es re

mai

ning

con

stan

t, w

ould

res

ult

in a

dec

reas

e/in

crea

se o

f th

e ne

t as

sets

attr

ibut

able

to

unith

olde

rs b

y ap

prox

imat

ely

6% (

2018

: 6%

). C

hang

es i

n in

tere

st ra

tes

are

revi

sed

annu

ally

dep

endi

ng o

n m

anag

emen

t's c

urre

nt v

iew

of m

arke

t vol

atili

ty a

nd o

ther

fact

ors.

36

NIK

KO

AM

SH

ENTO

N A

SIA

BO

ND

FU

ND

(C

onst

itute

d un

der a

Tru

st D

eed

regi

ster

ed in

the

Rep

ublic

of S

inga

pore

)

NO

TES

TO T

HE

FIN

AN

CIA

L ST

ATE

MEN

TS

For t

he fi

nanc

ial y

ear e

nded

30

June

201

9

10.

Fina

ncia

l ris

k m

anag

emen

t(co

ntin

ued)

(c)

Mar

ket r

isk

- Cur

renc

y ris

k

Cur

renc

y ris

k is

the

risk

that

the

valu

e of

fina

ncia

l ins

trum

ent w

ill fl

uctu

ate

due

to c

hang

es in

fore

ign

exch

ange

rate

s.

To m

inim

ise

curr

ency

ris

k, th

e Fu

nd m

ainl

y ho

lds

its e

xces

s ca

sh in

its

func

tiona

l cur

renc

y. F

or h

edgi

ng p

urpo

ses,

the

Fund

may

also

ent

er in

to fo

rwar

d fo

reig

n ex

chan

ge c

ontra

cts.

The

tabl

es b

elow

sum

mar

ise

the

Fund

's e

xpos

ure

to c

urre

ncy

risks

.

As

at 3

0 Ju

ne 2

019

KR

W S$C

NY S$

PHP S$

SGD

S$

IDR

S$

INR

S$

USD S$

Oth

ers S$

Tota

l S$

Ass

ets

Por

tfolio

of i

nves

tmen

ts

6,86

7,41

5 6,

202,

395

6,29

3,47

9 6,

087,

215

4,90

4,90

8

3,75

8,43

6 -

11,3

31,5

19

45,4

45,3

67

Sal

es a

wai

ting

settl

emen

t 1,

174,

325

- -

- -

- 77

3,86

7 1,

719,

632

3,66

7,82

4R

ecei

vabl

es-

- -

1,57

4,93

6 -

- -

- 1,

574,

936

Cas

h an

d ba

nk b

alan

ces

25,8

46

1,10

9,56

8 86

,485

3,

355,

952

6,59

5 30

,058

1,

323,

461

95,0

65

6,03

3,03

0 To

tal a

sset

s 8,

067,

586

7,31

1,96

3 6,

379,

964

11,0

18,1

03

4,91

1,50

3 3,

788,

494

2,09

7,32

8 13

,146

,216

56

,721

,157

Liab

ilitie

sP

ayab

les

- -

- 28

5,40

7 -

- -

- 28

5,40

7P

urch

ases

aw

aitin

g se

ttlem

ent

-99

1,46

2 -

2,00

0,00

0 41

1,52

8 -

-1,

180,

577

4,58

3,56

7 D

istri

butio

ns p

ayab

le

- -

- 89

9,47

0 -

- 4,

851

- 90

4,32

1To

tal l

iabi

litie

s -

991,

462

-3,

184,

877

411,

528

-4,

851

1,18

0,57

7 5,

773,

295

Net

off-

Stat

emen

t of

Fina

ncia

l Pos

ition

d

eriv

ativ

e fin

anci

al

ins

trum

ents

28

4 1,

430,

087

-(3

,176

,867

)-

1,75

5,90

2(4

0,36

7)

807

Net

cur

renc

y ex

posu

re

8,06

7,87

0 7,

750,

588

6,37

9,96

4 4,

656,

359

4,49

9,97

5 5,

544,

396

2,05

2,11

0 11

,966

,446

37

NIK

KO

AM

SH

ENTO

N A

SIA

BO

ND

FU

ND

(C

onst

itute

d un

der a

Tru

st D

eed

regi

ster

ed in

the

Rep

ublic

of S

inga

pore

)

NO

TES

TO T

HE

FIN

AN

CIA

L ST

ATE

MEN

TS

For t

he fi

nanc

ial y

ear e

nded

30

June

201

9

10.

Fina

ncia

l ris

k m

anag

emen

t(co

ntin

ued)

(c)

Mar

ket r

isk

- Cur

renc

y ris

k (c

ontin

ued)

As

at 3

0 Ju

ne 2

018

KR

W S$C

NY S$

HK

D

S$SG

D

S$ID

R

S$IN

R

S$U

SD S$O

ther

s S$To

tal

S$A

sset

sP

ortfo

lio o

f inv

estm

ents

10

,554

,024

11

,684

,268

3,

521,

838

7,22

4,22

8 3,

837,

012

2,29

5,45

7 -

14,0

03,4

10

53,1

20,2

37

Rec

eiva

bles

- -

- 13

,215

- -

- -

13,2

15C

ash

and

bank

bal

ance

s12

8,08

913

6,51

173

,199

163,

677

1,12

4,62

516

2,74

8 2,

617,

869

190,

847

4,59

7,56

5M

argi

nac

coun

ts56

,746

- -

- -

-2,

747

-59

,493

Tota

l ass

ets

10,7

38,8

59

11,8

20,7

79

3,59

5,03

7 7,

401,

120

4,96

1,63

7 2,

458,

205

2,62

0,61

6 14

,194

,257

57

,790

,510

Liab

ilitie

s P

ayab

les

- -

- 49

4,33

8-

- -

- 49

4,33

8D

istri

butio

nspa

yabl

e-

- -

1,01

2,93

1-

- 5,

873

-1,

018,

804

Tota

l lia

bilit

ies

- -

- 1,

507,

269

- -

5,87

3-

1,51

3,14

2

Net

off-

Stat

emen

t of

Fina

ncia

l Pos

ition

d

eriv

ativ

e fin

anci

al

ins

trum

ents

31

1 (2

,690

,153

) -

(1,2

99,4

1 8)

(1,2

10)

(6,1

59)

2,68

5,45

1 1,

362,

503

Net

cur

renc

y ex

posu

re

10,7

39,1

70

9,13

0,62

6 3,

595,

037

4,59

4,43

3 4,

960,

427

2,45

2,04

6 5,

300,

194

15,5

56,7

60

38



10. Financial risk management (continued)

(c) Market risk - Currency risk (continued)

The following table shows the Fund’s sensitivity to major foreign currenciesexposure with all other variables held constant. Changes in foreign currency rateare revised annually depending on management current view of market volatilityand other relevant factors.

Increase/decrease in foreign exchange rate

%

Increase/decrease in net asset attributable to

unitholders %

30 June 2019 30 June 2018 30 June 2019 30 June 2018

CNY 4 4 1 1IDR 8 7 1 1INR 6 6 1 -KRW 5 7 1 1USD 4 5 - -PHP 5 6 1 -HKD 4 5 - -

(d) Liquidity risk

Liquidity risk is the risk of loss arising from the inability of the Fund to meet itsobligations as and when they fall due without incurring unacceptable cost orlosses.

The Fund is exposed to daily cash redemptions from unitholders. However, inaccordance with the Fund's prospectus, minimum holdings and minimumredemption size are set.

To manage the liquidity risk, a cash buffer is maintained in the Fund andmonitored for minimum cash balances to prevent any extensive disposition ofassets which may occur at lower prices and overdraft situations to meet tradesettlements and obligations.

The Fund’s securities are considered readily realisable, as the majority securitiesare listed on the recognised stock exchange.

The Fund’s financial liabilities and net settled derivative financial liabilities areanalysed using contractual undiscounted cash flows for maturity groupings basedon the remaining period at the Statement of Financial Position date to thecontractual maturity date. As at 30 June 2019 and 2018, all liabilities are eitherpayable upon demand or due in less than 3 months. The impact of discounting isnot significant.

39




(d) Liquidity risk (continued)

Less than 3 months As at

30 June 2019 S$

As at 30 June 2018

S$

Payables 285,407 494,338 Purchases awaiting settlement 4,583,567 -Distribution payable 904,321 1,018,804 Contractual cash outflows (excluding gross

settled derivatives) 5,773,295 .1,513,142

The table below analyse the Fund’s derivative financial instruments in a loss position that will be settled on a gross basis into relevant maturity groupings based on the remaining period at the Statement of Financial Position date to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows. Balances due within 3 months equal their carrying balances, as the impact of discounting is not significant.

Less than 3 months As at

30 June 2019 S$

As at 30 June 2018

S$

Currency Forward - Outflow (11,909,177) (16,883,140)- Inflow 11,812,699 16,658,218Net outflow (96,478) (224,922)

(e) Credit risk

Credit risk is the risk that a counterparty will be unable to fulfil its obligations to theFund in part or in full as and when they fall due.

Concentrations of credit risk are minimised primarily by:

– ensuring counterparties as well as the respective credit limits are approved;– ensuring there are controls in place to identify and assess the

creditworthiness of counterparties and review such controls on a semi-annualbasis; and

– ensuring that transactions are undertaken with a large number ofcounterparties.

The Fund invests in financial assets, which have an investment grade as rated by Standard & Poor’s and/or Moody’s. The credit ratings are reviewed regularly.

40




(e) Credit risk (continued)

The table below analyses the Fund’s investments by credit ratings:



Floating rate securities

S$

Fixed ratesecurities

S$

Floating rate securities

S$

Fixed rate securities

S$

AAA* - 1,522,150 - 4,189,090AA+ - 349,197 - 3,494,822A+ - - - 1,387,949 A - 460,270 - 2,274,409A- - 1,671,327 - 1,975,890BBB- 1,522,749 - 1,530,812 1,544,623BB- 2,007,600 - - -Aa2 - 4,464,300 - 4,836,158A1 - 1,022,961 - 2,971,847Baa1 - 3,489,305 - 3,688,995Baa2 - 3,699,095 - 4,969,303B3 - 752,712 - -Not rated - 21,632,206 - 17,428,295Accrued interest receivables on

quoted fixed income securities 12,370 417,167 16,072 398,691 Total 3,542,719 39,480,690 1,546,884 49,160,072

*The balance includes securities that are issued by government agencies of governments that havea AAA rating as rated by Standard & Poor's.

41




(e) Credit risk (continued)

All trade settlement with approved counterparties is on Delivery versus Paymentand/or Receipt versus Payment basis, with the exception of initial public offerings,new issues and placement transactions.

Credit risk arises from cash and bank balances and outstanding and committedtransactions with brokers. The table below summarises the credit rating of banksand custodian in which the Fund’s assets are held as at 30 June 2019 and 30June 2018.

Credit rating as at

30 June 2019

Credit rating as at

30 June 2018 Source of

credit rating

Bank balance - BNP Paribas Securities

Services, operating throughits Singapore Branch A+ A Standard & Poor's

Financial derivatives - Australia and New Zealand

Bank AA- AA- Standard & Poor's - BNP Paribas Securities

Services operating throughits Singapore Branch A+ A Standard & Poor's

- CIMB Bank A- N.A. Standard & Poor's - Citibank N.A A+ A+ Standard & Poor's - Goldman Sachs BBB+ N.A. Standard & Poor's - ING Group NV A+ A+ Standard & Poor's - JPMorgan Chase & Company A- A- Standard & Poor's - UBS AG Singapore Branch A+ A+ Standard & Poor's

Custodian- BNP Paribas Securities

Services, operating throughits Singapore Branch A+ A Standard & Poor's

The credit ratings are based on Long-Term Local Issuer Ratings published by the rating Agency.

The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets.

42




(f) Capital management

The Fund’s capital is represented by the net assets attributable to unitholders. TheFund strives to invest the subscriptions of redeemable participating units ininvestments that meet the Fund’s investment objectives while maintainingsufficient liquidity to meet unitholder redemptions.

(g) Fair value estimation

The Fund classifies fair value measurements using a fair value hierarchy thatreflects the significance of the inputs used in making the measurements. The fairvalue hierarchy has the following levels:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities(Level 1).

• Inputs other than quoted prices included within level 1 that are observable forthe asset or liability, either directly (that is, as prices) or indirectly (that is,derived from prices) (Level 2).

• Inputs for the asset or liability that are not based on observable market data(that is, unobservable inputs) (Level 3).

The following table analyses within the fair value hierarchy the Fund’s financial assets and liabilities (by class) measured at fair value at 30 June 2019 and 2018:

As at 30 June 2019 Level 1

S$Level 2

S$Level 3

S$Total

S$

AssetsFinancial assets designated at fair value through profit or

loss at inception: - Quoted fixed income securities - 43,023,409 - 43,023,409- Quoted investment fund 2,421,958 - - 2,421,958Financial derivatives at fair value - 66,324 - 66,324

2,421,958 43,089,733 - 45,511,691

LiabilitiesFinancial liabilities designated at fair value through profit or

loss at inception: Financial derivatives at fair value - 96,478 - 96,478

43




(g) Fair value estimation (continued)

As at 30 June 2018Level 1

S$Level 2

S$Level 3

S$Total

S$

AssetsFinancial assets designated at

fair value through profit or loss at inception:

- Quoted fixed income securities - 50,706,956 - 50,706,956- Quoted investment fund 2,413,281 - - 2,413,281Financial derivatives at fair value - 276,247 - 276,247

2,413,281 50,983,203 - 53,396,484

LiabilitiesFinancial liabilities designated at fair value through profit or

loss at inception: Financial derivatives at fair value - 224,922 - 224,922

Investments in open ended investment funds whose net asset value is struck daily, price information is published and readily available and units are subscribed and redeemable on demand at the published price, are classified within level 1.

Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within level 2. These include investment-grade corporate bonds, government bonds and over-the-counter derivatives.

Except for cash and bank balances and margin accounts which are classified as level 1. The Fund's assets and liabilities not measured at fair value at 30 June 2019 and 2018 have been classified as level 2. The carrying amounts of these assets and liabilities approximate their fair values as at the Statement of Financial Position date.

44




(h) Interests in unconsolidated structured entities

The Fund's investment in Investee Fund is subject to the terms and conditions ofthe respective Investee Fund’s offering documentation and is susceptible tomarket price risk arising from uncertainties about future values of the InvesteeFund. The Manager makes investment decisions after extensive due diligence ofthe underlying fund, its strategy and the overall quality of the underlying fund'sManager. The Investee Fund in the investment portfolio is managed by theManager who is compensated by the respective Investee Fund for their services.Such compensation generally consists of an asset based fee and is reflected inthe valuation of the Fund's investment in each of the Investee Fund.

The Fund has right to request redemption of its investment in Investee Fund on adaily basis.

The exposure to investment in Investee Fund at fair value is disclosed under theStatement of Portfolio. This investment is included in "Portfolio of Investments" inthe Statement of Financial Position.

The Fund's holding in Investee Fund, as a percentage of the Investee Fund’s totalnet asset value, will vary from time to time dependent on the volume ofsubscriptions and redemptions at the Investee Fund level. It is possible that theFund may, at any point in time, holds a majority of an Investee Fund's total units inissue.

The Fund's maximum exposure to loss from its interests in Investee Fund is equalto the total fair value of its investment in Investee Fund.

Once the Fund has disposed of its units in an Investee Fund, the Fund ceases tobe exposed to any risk from that Investee Fund.

11. Related party transactions

In addition to related party information shown elsewhere in the financialstatements, the following significant transactions took place during the financialyear between the Fund and a related party at terms agreed between the partiesand within the provisions of the Deeds:

2019 S$

2018 S$

Bank balances held with related party of the Trustee 6,033,030 4,597,565

45



12. Financial ratios

Expense ratio

SGD Class A 2019 2018

Total operating expenses S$ 61,927 69,243Average daily net asset value S$ 4,588,873 4,873,616Total expense ratio1 % 1.35 1.42

USD Class A 2019 2018

Total operating expenses S$ 3,308 4,161Average daily net asset value S$ 245,015 292,718Total expense ratio1 % 1.35 1.42

SGD Class B 2019 2018

Total operating expenses S$ 437,129 562,410Average daily net asset value S$ 42,531,372 54,411,373Total expense ratio1 % 1.03 1.03

USD Class B 2019 2018

Total operating expenses S$ 210 212Average daily net asset value S$ 20,553 20,392Total expense ratio1 % 1.02 1.04

Turnover ratio2019 2018

Lower of total value of purchases or sales S$ 73,276,900 120,501,791 Average daily net asset value S$ 47,385,813 59,598,099Total turnover ratio2 % 154.64 202.19

1 The expense ratio has been computed based on the guidelines laid down by the Investment Management Association of Singapore ("IMAS"). The calculation of the expense ratio at financial year end was based on total operating expenses divided by the average net asset value for the year. The total operating expenses do not include (where applicable) brokerage and other transactions costs, performance fee, interest expense, distribution paid out to unitholders, foreign exchange gains/losses, front or back end loads arising from the purchase or sale of other funds and tax deducted at source or arising out of income received. The Fund does not pay any performance fee. The average net asset value is based on the daily balances.

2 The portfolio turnover ratio is calculated in accordance with the formula stated in the Code on Collective Investment Schemes. The calculation of the portfolio turnover ratio was based on the lower of the total value of purchases or sales of the underlying investments, divided by the average daily net asset value.

46


REPORT TO UNITHOLDERS For the financial year ended 30 June 2019

The following contains additional information relating to the Fund.

Distribution of investments

Please refer to the Statement of Portfolio on pages 1 to 1 .

Credit rating of debt securities


S$


attributable to unitholders at 30 June 2019

%

AAA 1,522,150 2.99AA+ 349,197 0.69A 460,270 0.90A- 1,671,327 3.28BBB- 1,522,749 2.99BB- 2,007,600 3.94Aa2 4,464,300 8.77A1 1,022,961 2.01Baa1 3,489,305 6.85Baa2 3,699,095 7.26B3 752,712 1.48Not rated 21,632,206 42.49Accrued interest receivable on quoted fixed

income securities 429,537 0.84Total 43,023,409 84.49

47



3. Top 10 holdings

10 Largest holdings at 30 June 2019

Fair value S$


attributable to unitholders

%

Nikko AM China Onshore Bond Fund 2,421,958 4.76Korea Treasury Bond 1.875% due 10/06/2026 2,393,346 4.70Korea Treasury Bond 3.75% due 10/12/2033 2,237,832 4.40Korea Treasury Bond 4% due 10/12/2031 2,226,467 4.37Malaysia Government Investment Issue 4.13% due 09/07/2029 2,042,940 4.01

Standard Chartered Public Listed Company 5.375% due 31/12/2059 2,007,600 3.94

Philippine Government Bond 5.75% due 12/04/2025 1,972,330 3.87

Indonesia Treasury Bond 6.625% due 15/05/2033 1,921,303 3.77Thailand Government Bond 2.125% due 17/12/2026 1,915,322 3.76

India Government Bond 7.26% due 14/01/2029 1,620,246 3.18

10 Largest holdings at 30 June 2018

Fair value S$


attributable to unitholders

%

Korea Treasury Bond 4% due 10/12/2031 3,280,722 5.82Malaysia Government Investment Issue 4.39% due

07/07/2023 3,084,934 5.48Korea Treasury Bond 1.875% due 10/06/2026 2,923,607 5.19Korea Treasury Bond 2.25% due 10/06/2025 2,778,103 4.93Nikko AM China Onshore Bond Fund 2,413,281 4.28Bank of China Limited 4.65% due 05/03/2021 2,274,409 4.04Indonesia Treasury Bond 6.625% due 15/05/2033 2,062,395 3.66National Bank for Agriculture and Rural Development

7.69% due 31/03/2032 1,865,352 3.31Hong Kong Government Bond 2.39% due

20/08/2025 1,766,622 3.14Hong Kong Government Bond 2.07% due

26/08/2026 1,728,200 3.07

48



4. Exposure to financial derivatives


S$


attributable tounitholders

30 June 2019%

Unrealisedgains/(losses)

S$

Realisedgains/(losses)

S$

Forward foreign exchangecontracts (30,154) (0.06) (30,154) (63,742)

Futurescontracts - - - (12,921)

5. Global exposure to financial derivatives

The global exposure to financial derivatives is computed using the commitmentapproach which is calculated as the sum of:

a. the absolute value of the exposure of each individual financial derivative notinvolved in netting or hedging arrangements;

b. the absolute value of the net exposure of each individual financial derivativeafter netting or hedging arrangements; and

c. the sum of the values of cash collateral received pursuant to:

i. the reduction of exposure to counterparties of OTC financial derivatives; and

ii. EPM techniques relating to securities lending and repurchase transactions,and that are reinvested

49



Collateral

Please refer to Note 5 of the Notes to the Financial Statements on page 2 .

Securities lending or repurchase transactions

Nil.

Investment in unit trusts, mutual funds and collective investment schemes

Please refer to the Statement of Portfolio on page 1 to 1 .

Borrowings

Nil.

Amount of units created and cancelled for the financial year ended 30 June2019

S$

Units created 4,694,404Units cancelled (11,111,047)

Turnover ratio


Expense ratio


Related party transactions


Any other material information that will adversely impact the valuation of thefundNil.

Intentionally left blank.



12 Marina View, #18-02 Asia Square Tower 2, Singapore 018961Intermediaries Hotline: 1800 535 8025 / 65 6535 8025Website: www.nikkoam.com.sg

Company registration number 198202562H

Documents

450423 11073 Shenton Asia Bond Fund BN3Financial Year 2020 by 0.2% to 7.0%. Meanwhile, both Bank Negara Malaysia and the Bangko Sentral ng Pilipinas (BSP) lowered their benchmark interest